Here’s Why Bitcoin Yield on L2s Are Drying Up, According to Two Prime

Two Prime reports that bitcoin yields on layer-2 networks are drying up as the arbitrage and incentive-driven opportunities that once propped up returns have narrowed. The crypto asset manager points to compressed spreads and fading token incentives as the main forces behind the decline, leaving L2s with fewer ways to pay holders for locking up BTC. The shift matters because L2s had marketed themselves as a way to put idle bitcoin to work, and thinner yields could slow deposits into those networks. What to watch next is whether L2 protocols can replace subsidy-fueled rewards with durable fee revenue, or whether bitcoin holders migrate back to base-layer and custodial yield options.